FATF Warns Pakistan: Greylist Exit Doesn’t Shield Against Terror Financing

The Financial Action Task Force (FATF), the international body combating money laundering and terrorist financing, cautioned Pakistan on Friday that its exit from the "greylist" in October 2022 does not shield it from ongoing vulnerabilities, urging sustained vigilance against criminal activities. FATF President Elisa de Anda Madrazo, speaking at a press conference during the organisation's fourth plenary in Paris under Mexico's presidency, stressed that no jurisdiction is "bulletproof" post-delisting.

"We do invite all jurisdictions, including those who have been delisted, to continue their good work to prevent and deter crimes," she said, emphasising the need for robust implementation of anti-terror measures. Pakistan, while no longer a full member, remains under follow-up scrutiny by the Asia Pacific Group (APG) to verify compliance, highlighting the watchdog's global commitment to disrupting illicit financial flows amid evolving threats like digital wallets exploited by groups such as Jaish-e-Mohammad (JeM) for funding terror camps.

India's 2022 National Risk Assessment has flagged Pakistan as a significant source of terror financing risks in South Asia, a concern echoed in a recent "Comprehensive Update on Terrorist Financing Risks" report co-contributed by India. The study delves into emerging methods, including state-sponsored terrorism and proliferation financing linked to Pakistan's National Development Complex, underscoring regional instability.

Madrazo reiterated FATF's dedication to enhancing standards through assessments and processes to minimise such risks worldwide. "The FATF remains committed to continuing to strengthen our standards... to make sure we can benefit the people by having less terrorist financing," she affirmed, calling on nations like Pakistan to maintain momentum in curbing these threats, particularly as non-traditional channels like virtual assets complicate detection.

The Paris plenary, attended by delegates from over 200 jurisdictions, adopted initial mutual evaluation reports for Belgium and Malaysia under a revamped, risk-focused framework that prioritises tangible outcomes in countering money laundering, terror financing, and proliferation. This new approach aims for timelier, more effective oversight compared to prior cycles.

In a positive development, the FATF delisted Burkina Faso, Mozambique, Nigeria, and South Africa from increased monitoring after they fulfilled their action plans, signalling progress in global efforts to fortify financial systems against abuse. These advancements reflect the organisation's three-day deliberations on illicit finance, focusing on depriving criminals of ill-gotten gains through enhanced cooperation and enforcement.

Also Read: Donald Trump Clears Binance Founder CZ of Money-Laundering Conviction

As Pakistan navigates its post-greylist phase, the FATF's warnings align with broader geopolitical tensions, where South Asian security hinges on transparent financial reforms. The plenary's outcomes bolster international resolve, but challenges persist in high-risk areas, with calls for integrated strategies to address state-linked proliferation and digital evasion tactics. Madrazo's remarks serve as a diplomatic nudge, reinforcing that delisting is a milestone, not an endpoint, in the protracted battle against terror's economic lifelines.

Also Read: #BiharPolls: Promises Galore, Voter Skepticism Ahead of Bihar Assembly Elections